What is a Dividend Aristocrat?

There is a reason why the Dividend Ninja mentions Dividend Aristocrats in his Ninja Lessons investing philosophy. They are tried and true dividend winners who have consistently provided investors with increasing dividends year in and year out.

Dividend Aristocrats make a great addition to a portfolio of dividend stocks. They are a great place to start your search for the next company to add to your portfolio.

What is a Dividend Aristocrat?

Being a Dividend Aristocrat is a hard title for a company to earn, and it is even harder to keep. To get into this exclusive club, a company must consistently raise its dividends each year for 25 consecutive years. If the company simply maintains their annual dividend payout or lowers the dividend even in tough times, they are removed from the list. Additionally, it will take another 25 years to earn its place back.

The 2008 to 2009 Financial Crisis saw many bellwether stocks cut or eliminate their dividends altogether. Entire industries and companies that were considered rock solid dividend payers, lost their aristocrat status. Former stalwart stocks such as General Electric (NYSE: GE) saw their membership in the exclusive Dividend Aristocrat club revoked after cutting their dividend.

Benefits of Dividend Aristocrats in Your Portfolio

If dividend-paying stocks are stable companies that reduce your risk, then the Dividend Aristocrats are risk reduction on steroids. Granted, nothing is a guaranteed panacea for risk, and the financial crisis of 2008 showed that even the Dividend Aristocrats could be at risk for macro-level problems. However, if safety is what you are looking for, the Dividend Aristocrats are a great place to start your search. They provide consistent dividend payouts and the potential for share price appreciation.

Characteristics of a Dividend Aristocrat

Dividend Aristocrats have several of fundamental characteristics in common with each other. Most of the stocks that make the list are tried and true multinational blue chip companies. Many have a beta near 1.0 and continue to mirror overall stock market movements. Additionally, Dividend Aristocrats that are part of the S&P 500 index, have a large market capitalization and liquidity for large trading volumes.

Current Dividend Aristocrats in the S&P 500

Here is a list of the current companies that comprise the Standard & Poor’s 500 Dividend Aristocrat Index (as of August 2013).

Symbol

Company

Symbol

Company

ABBV

AbbVie Inc

HCP

HCP Inc

ABT

Abbott Laboratories

HRL

Hormel Foods Corp

ADM

Archer-Daniels-Midland Co

ITW

Illinois Tool Works Inc

ADP

Automatic Data Processing

JNJ

Johnson & Johnson

AFL

AFLAC Inc

KMB

Kimberly-Clark

APD

Air Products & Chemicals Inc

KO

Coca-Cola Co

B BF.B

Brown-Forman Corp

LEG

Leggett & Platt

BCR

Bard C.R. Inc

LOW

Lowe’s Cos Inc

BDX

Becton Dickinson & Co

MCD

McDonald’s Corp

BEN

Franklin Resources Inc

MDT

Medtronic Inc

BMS

Bemis Co Inc

MHFI

McGraw Hill Financial Inc

CAH

Cardinal Health Inc

MKC

McCormick & Co

CB

Chubb Corp

MMM

3M Co

CL

Colgate-Palmolive Co

NUE

Nucor Corp

CLX

Clorox Co

PEP

PepsiCo Inc

CTAS

Cintas Corp

PG

Procter & Gamble

CVX

Chevron Corp

PNR

Pentair Ltd.

CINF

Cincinnati Financial Corp

PPG

PPG Industries Inc

DOV

Dover Corp

SHW

Sherwin-Williams Co

ECL

Ecolab Inc

SIAL

Sigma-Aldrich Corp

ED

Consolidated Edison Inc

SWK

Stanley Black & Decker

EMR

Emerson Electric Co

SYY

Sysco Corp

FDO

Family Dollar Stores Inc

T

AT&T Inc

GPC

Genuine Parts Co

XOM

Exxon Mobil Corp

GWW

Grainger W.W. Inc

Starting with the Dividend Aristocrats, you can narrow down your search. You can focus and invest in the largest tried and true dividend payers, many with global reach.

Do you like investing in the Dividend Aristocrats? Why are they on your list? Or, why do you stay away from them? I’d love to hear your thoughts in the comment section below.

Hank Coleman is a personal finance expert who writes about finance, retirement, and investing on his blog, Money Q&A. Be sure to also follow him on Twitter @MoneyQandA and check out his podcast on,“Your Money: Your Choices”, on iTunes.

11 Responses to “What is a Dividend Aristocrat?”

Most of these companies are at the point where I would assume they have already undertaken most of the growth they are expected to be able to have – hence distributing earnings in the form of dividends as opposed to reinvesting back into growth.

I think the aristocrats are great for those seeking financial independence – allowing for a regular income stream without having to sell down you position.

I believe your assumption is incorrect. These DA’s pay out a portion of their earnings as dividends (30% to 70%), and the rest they retain for operational expenses and growth. Albiet it may be a slower growth rate than smaller cap companies, but that is why they have the stability. Slow and steady wins the day!

btw
I just wanted to say, congrats on starting your investing and financial independence journey so early! 🙂

average guy

Sep 10. 2013

I am confused. AbbVie (ABBV) has existed for something like a year as a spin off from Abbott Labs.
>>To get into this exclusive club, a company must consistently raise its dividends each year for 25 consecutive years.

How can it be considered a DA if the company has existed for such short time? So it look like they are considering Abbott Lab’s history. Kind of weird…

I don’t try to time the market, so I invest capital when the funds are available and/or add to current holdings. Every 6 months I look at the market it looks topped out and then continues to go higher. At some point I’m sure there will be a pull-back or market correction. But I’d rather have my money into paying dividends and distributions than sitting on cash which earns nothing. I am more interested in having my portfolio generate income than worrying about the right time to buy – which in reality none of us know. 😉

I’m curious what would make it better to buy individual dividend aristocrats rather than buying an etf of dividend aristocrats. Or perhaps a mix of both would be nice. Can you give me the reason why someone like yourself would rather pick them than let an etf do it for you? Do you get more out of the dividends if you pick them individually?

[…] start your search for companies to add to your portfolio. For example, many investors turn to the Dividend Aristocrats which are found on the S&P 500 Dividend Aristocrats Index. Members of the Dividend Aristocrats […]

Disclaimer

The Dividend Ninja is not a professional financial advisor, investment dealer, or a certified financial planner. This website does not offer professional or financial advice, and is intended to provide general information only. The Dividend Ninja is not responsible for the investment decisions you make. You should consult with your financial advisor before making any investment decisions. Be prudent and cautious. Do your own research, and invest in what you understand. By use of this website, you agree to these terms.